Investing

Financial myths and realities: Investing

By Patricia Dubois

There are a lot of myths about money, and Sun Life advisors have heard nearly all of them. Here are 2 about investing — and the realities behind them.

There’s no shortage of misconceptions about money. Well-meaning but mistaken people spread them to family and friends and sometimes even try to convince their financial advisors. In this series of articles about financial myths and realities, we’ll share some of what our advisors hear on the job, and aim to separate fact from fiction. Let’s start with investing.

Myth #1: Investing doesn't cost anything

“Some of my clients who invest in mutual funds believe they're not paying for investment services, but that's not true,” says mutual fund representative Nathalie Jacques.1 “When you go to the dentist, you pay for her services. It's the same for an advisor who will be taking care of your finances and making recommendations tailored for you.”

“Fees for investing in most mutual funds are calculated on the value of the account, and average between 1.5% and 2.5%2 per year. Commonly known as ‘annual management fees,’ they appear on the fund fact sheets investors receive when they open an investment account, so it's important to read these documents carefully,” she explains.

“And there’s good news for investors: Compensation paid to the mutual fund dealer is now indicated clearly in a dollar amount on annual statements issued by providers such as Sun Life Financial Investment Services (Canada) Inc., starting in January 2017,” notes Jacques. “Be sure to take a look.”

To find out whether your advisor has the right to pursue activities with respect to advising or selling financial products, check with your provincial regulator. You can also check out the Investment Funds Institute of Canada website for information about existing protection based on the type of investment you're considering.

Fraudcan happen, however, notes the Autorité des marchés financiers, the regulator in Quebec. One opportunity for fraud happens when investors make out cheques to the advisor or to a firm the advisor owns, like a numbered company. “Whenever you write a cheque to deposit money to your investment account, be sure you make it out to the mutual fund dealer, like Sun Life Financial Investment Services (Canada) Inc., not to your advisor,” cautions Jacques.

Reading the prospectus for the proposed mutual fund helps you learn about the product your advisor is recommending, so you can make an informed decision. If you're still not sure, ask for a second opinion.

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